By Christine Idzelis
The S&P 500 has struggled alongside its former stars
The U.S. stock market is closed for trading on Good Friday.
Investors have been forced to confront a disappointing reality in 2026: A handful of Big Tech companies have the power to vex investors who are bullish on the S&P 500, even though a sizable portion of the index’s members have seen their shares climb, or at least outperform.
For much of the past three years, stock-market bulls have been talking about a more broad-based rally as something that could help to keep pushing major indexes like the S&P 500 higher.
In this latest bull market for U.S. stocks, the largest names did much of the heavy lifting, which resulted in the 10 largest stocks by market value in the S&P 500 seeing their weighting in the index swell to more than 40% last year, according to research from Goldman Sachs.
Since then, things have started to shift, with more stocks outperforming the index. Yet the U.S. stock market booked a nasty first-quarter loss despite the S&P 500 SPX showing plenty of breadth in the first three months of the year, said Adam Parker, founder of Trivariate Research, in a phone interview.
For years, some on Wall Street – including Rob Arnott, chair of Research Affiliates – have warned that the S&P 500 has become heavily weighted toward a handful of corporate behemoths with high valuations.
Now those concerns are playing out in real time.
A wide array of stocks rallying in the index doesn’t mean the S&P 500 will necessarily perform better, yet investors tend to point to strong breadth as a “healthy sign” for the market, Parker cautioned.
By Trivariate’s tally, 238 stocks in the S&P 500, or nearly 48%, were up in the first quarter, while 57% of the index beat the stock-market benchmark.
How S&P 500 stocks performed in the first quarter
Price performance Number of stocks Percentage of index Up > 20% 63 12.6% Up > 10% 128 25.6% Up 238 47.6% Beaten market 285 57.0% Down > 10% 142 28.4% Down > 20% 51 10.2% Source: Trivariate Research
Still, the S&P 500 slumped 4.6% in the first quarter to mark its worst quarterly performance since 2022 as fears over high oil prices triggered by the Iran conflict hammered the market in March. Big Tech tumbled, with its outsize weighting overwhelming the index after the group also saw heavy losses in February amid worries over high valuations.
“The Great 8 underperformed,” pulling down the S&P 500, because their giant market values means they have heavy weightings in the index, said Parker, referring to the group known as the Magnificent Seven plus Broadcom Inc. Breadth is not a good predictor of subsequent S&P 500 returns, he said, noting that, conversely, the S&P 500 can also rally due to strength in the megacaps even when the U.S. large-cap index is seeing narrow leadership.
The Magnificent Seven consists of Nvidia (NVDA), Apple (AAPL), Google parent Alphabet (GOOGL), Microsoft (MSFT), Amazon.com (AMZN), Facebook parent Meta Platforms (META) and Tesla (TSLA). All of those Big Tech stocks have market values exceeding $1 trillion, as does Broadcom (AVGO), FactSet data show. Nvidia, a maker of artificial-intelligence chips, has the largest market value among them, at more than $4 trillion, according to FactSet data, at last check.
An exchange-traded fund that equally weights stocks in the S&P 500, the Invesco S&P 500 Equal Weight ETF RSP, was also signaling a relatively broad rally under the hood of the index this year.
Still, the S&P 500, with its heavy exposure to Big Tech, underperformed.
Shares of the Invesco S&P 500 Equal Weight ETF eked out a first-quarter gain of 0.2%, despite struggling in March. That’s in contrast to the widely followed S&P 500 index, which declined.
On Thursday, the U.S. stock market finished mostly higher, with the S&P 500 edging up 0.1%, the Nasdaq composite COMP rising 0.2% and the Dow Jones Industrial Average DJIA slipping 0.1%.
All three benchmarks were up on the holiday-shortened week, with the S&P 500 getting a lift from Big Tech’s outperformance.
The Roundhill Magnificent Seven ETF MAGS – which holds Nvidia, Apple, Alphabet, Microsoft, Amazon, Meta and Tesla – had a large weekly gain of 5.1%, according to FactSet data. That easily beat the S&P 500’s 3.4% climb on the week, while the Invesco S&P 500 Equal Weight ETF ended Thursday with an even smaller weekly rise of 2.5%.
The U.S. stock market is closed on Good Friday.
The S&P 500 remains in the red so far this year, ending Thursday down 3.8%, according to FactSet data.
-Christine Idzelis
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04-03-26 1118ET
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